Hiring a Sales Manager - External or Internal?

"Should we hire an external Sales Manager or promote from within?" 
It depends. Open Sales Management positions are bad for sales organizations.  Having the wrong Sales Manager (SM) is worse. This post helps you decide between hiring an internal or external Sales Manager.

Scenario

Let's say Hanna, Sale's HR Business Partner, must find a new Sales Manager.  She works for Rams, Inc. - a large software manufacturer. The outgoing SM was in the role for 8 years.  Hanna has two candidates to help Sales decide between: Iris and Eddie.  Iris is a Rams' top-producing 12-year Sales Rep with consistent promotion.  She currently works in a peer territory - not in the one needing an SM. Eddie is an SM from a large software company. He does not have experience with Rams' products.
Hanna has already evaluated both candidates for Fit, Function, and Role. See my colleague John Kenney's post for more on this. Both Eddie and Iris passed these tests. Eddie got the edge, though, as he has been an SM for 3 years. Now, Hanna must consider other factors to decide between internal and external.

Hiring Factors

1. Current Team Needs

Description: The "look and feel" of the current sales team. For example, are they all tenured or are some new? Knowing the current Sales Rep make up will reveal the needs of an SM. Other things to look for:

• Ratio of A Sales Reps to B or C Reps - higher amount of B or C players will require more of a development/hand-holding approach
  
• Social vs. traditional sales approaches - if most Reps are using emerging social selling, the SM must be strong at this
  
• Highly competitive vs. more relaxed teamwork - Reps that are super competitive may need an SM that can foster teamwork (and vice-versa)
  

In the scenario, Rams Sales Reps are highly competitive and tenured. They are always looking for an edge - some tip or trick to leverage. If Rams' strategy is to maintain this Rep style, Eddie is the choice. Why? Because he has been in multiple roles and multiple companies - a sure way to have picked up multiple selling best practices.  If, however, Rams would like a more team approach, it's Iris who wins. Because she knows the culture and what it will take to change Rep behavior.

2. Go-to-Market Approach

Description: How the sales team is tasked on reaching the target market. For example, is it all direct sales? Maybe the team is leveraging channel partners, or inside sales.  It might be a hybrid combining multiple approaches.  An SM for a direct model may not need to know Channel Management principles. If the SM will be managing Inside Sales, there will be more telephone coaching.  Other factors to consider here:

• Will the Reps interact with other types of sales teams? This requires an SM with internal partnering skills - an internal candidate would have a head start
  
• If the Sales team has only ever had one model, an external SM candidate can bring needed variety
  
• Does the company make more money off of recurring revenue (existing account renewals, cross-sells, upsells?) Either internal or external may work here. Internal Reps would have a better knowledge of the product set and value propositions. External hires can bring a better approach for reaching new business - this would better balance the revenue between existing and new logo.
  

For Rams, it is a direct sales model focusing on existing customer revenues. They have recently implemented web/telephone inside sales for their lowest tier.  In this case, Iris gets the nod since she also has some inside sales background. 

3. Technology and Data Use

 Description: Sales forces vary as to their mandate and use of Sales tools and data.  On one extreme, a company may enforce very little use of a CRM.  Other companies require accurate data entry and forecast tool usage.  If your company is not strong on technology and data, external hires are better. He/she can bring some new practices to the sales force. If technology and data are very strongly used, choose internal. The internal candidate will have an advantage already knowing the systems. Also consider: 

• Sales aid usage - Sales aids include call plans, proposal templates, evaluation criteria, give-get frameworks, etc. If your company has customized these and use them a lot, the internal candidate is better. If these tools are generic or not widely used, either candidate works. 
  
• Forecasting tools - many companies have customized forecasting tools tied into financial systems. This usually gives the edge to the internal candidate (learning curve.) However, if the tools are easily learned, pick the external candidate with SM experience. This is because of the increased forecasting duties on an SM over a Rep.
  

At Rams, they do not have a strong culture of tool and data use.  They are trying to get better at this - implementing a CRM for the second time.  Because of this, Eddie will be the victor.  He can bring fresh insight to Rams for tools and adoption. Also, he won't have a steep learning curve because tools are of no/low use.